Adobe Summit--Looking Forward To An Insight Into Transformation

Next week sees Adobe holding its annual summit, this year in Salt Lake City, Utah (disclosure - Adobe is covering my travel and expenses to attend the event). The day one keynote see Adobe CEO, Shantanu Narayen talk about reinvention being a journey. The focus of his talk would appear to be about how organizations can reinvent themselves in a digital marketing world. For me, the real subtext behind Narayen's presentation will be how Adobe has seemingly transformed itself to be a credible cloud vendor.

I spend a lot of time talking about legacy technology vendors and generally bemoaning their seeming inability to see the obvious changes that are coming down the wire. I've spent time critiquing IBM, HP, Cisco and EMC for either their apparent blindness, or their arrogance to believe that they can stand up against seismic shifts.

But every now and then we see a vendor that really manages the transformation process. Both
Microsoft and
Intuit are two good examples. Both come from a very desktop-centric origin and both were poor in their initial reactions to the cloud (who can forget Microsoft's dismissal of SaaS and its "software plus services" approach. Similarly we've seen Intuit stumble several times when trying to respond to the threat posed by its cloudy competitors).

But both of these companies have managed to reinvent. Microsoft's Office 365 is seeing amazing uptake within organizations large and small. The offering, a cloud-based version of Microsoft's Office suite, can be seen as a late reaction to
Google Apps. But whereas Google had none of the baggage of having to support desktop users, it is Microsoft that seems to be winning the office productivity war. And Intuit has finally delivered a truly credible cloud-based SMB accounting product. While it took them a few years too many, years that gave competitor
Xero a good chance to gain momentum, QuickBooks Online is finally in-market, and really gaining momentum.

Which brings us back to Adobe. Recently a friend shared a Harvard Business Review case study about the company. The case study is fascinating reading for anyone who spends time thinking about the various obstacles that a traditional technology company wanting to transform itself needs to think about - customer cannibalization, a move from perpetual to subscription licensing, a need to have a more direct relationship with customers etc.

The amount of pain Adobe had to go through in its transformation cannot be underestimated. Adobe transformed its business in multiple ways - it developed a new (and still largely unknown outside of the marketing world) digital marketing business and changed to a subscription model of pricing. Most people will remember the huge outcry when Adobe finally cut the perpetual licensing model for its creative solutions, in favor of the Creative Cloud subscription model. Customers balked by Adobe stood firm. As the HBR case study states:

In 2012, Adobe transformed its core creative software business, now in the Digital Media business unit, by launching Creative Cloud (CC) where customers paid a monthly subscription fee. By May 2013, CC had attracted almost 700,000 paid subscribers and was far exceeding Adobe’s expectations, replacing Photoshop as Adobe’s most highly rated software in terms of customer satisfaction. As Adobe transitioned customers to CC and its subscription model, it had continued to offer customers the choice of buying its packaged creative software through resellers and retailers. Against this backdrop, Adobe hit a larger than expected bump following its MAX user conference on May 6, 2013, when it announced that it would no longer sell its packaged creative software and that all future innovation would be focused solely on CC. Although most MAX participants and industry observers met the news with equanimity, some customers complained they were being forced to “rent” the software—which could eventually cost them more—and might lose their work if their subscriptions lapsed. They asked Adobe to continue offering both options, as done by almost all other players, including Microsoft. As Narayen drove north to San Francisco, he knew the
Bloomberg journalist would likely ask if Adobe had plans to reverse its decision.

Clearly some of this pain around pricing still exists. Not directly related to subscription versus perpetual, but on a similar note, a leading educational technology figure had this to say:

@benkepes Give Adobe a kick around their Education policy no one I know thinks their offerings for school “works” ;)

So clearly some issues still remain. But those small niggles don't change the very real fact that Adobe is doing as good a job as any legacy technology vendor of transforming itself. It is interesting that while Adobe's digital marketing tools most closely compete with Salesforce's suite of products, Adobe is far less visible than Salesforce. Perhaps this is because the core Salesforce offering, CRM is so broadly applicable as an enterprise back-office tool as opposed to Adobe's original offerings (PostScript, PDF and Creative Suite).

Either way, my predictions for this year's Summit focus partly around Adobe broadening and deepening its digital marketing platform, but also upon it spending time to ensure that its existence and transformation is a story that more people are aware of. That, alongside asking the pesky questions about educational pricing, will keep me busy next week!